Patisserie Valerie turns to RSM after books cooked


The crisis-hit parent company of Patisserie Valerie, the café chain, has turned to the UK’s eighth-biggest auditor to help restore City confidence in its accounts as it tries to recover from the accounting scandal that brought it to the brink of collapse.

Sky News understands that Patisserie Holdings, which is run by the entrepreneur Luke Johnson, will announce imminently that RSM has agreed to replace Grant Thornton as its auditor.

The appointment will come after a frantic search in which some of the larger accounting firms declined the chance to tender for Patisserie Holdings’ audit contract.

The company, which has appointed a new executive team in recent weeks, has seen its shares suspended since the discovery of financial irregularities which led to the arrest of its former finance director.

Grant Thornton, which has overseen Patisserie’s books since 2006, is now under investigation by the soon-to-be-disbanded Financial Reporting Council.

The café chain was plunged into the mire when it confirmed that it had been notified of “potentially fraudulent” accounting irregularities.

The apparent fraud resulted in estimated revenue and profits for the year to September being slashed to £120m and £12m respectively.

It set off a chain of events including the suspension, and subsequent resignation, of Chris Marsh, the chief financial officer, who was arrested by police on 12 October before being released on bail.

Luke Johnson, the executive chairman who has made fortunes from a string of restaurant chains including Pizza Express, stumped up £20m to keep the business afloat, with City investors also pumping millions of pounds in by buying new shares.

Patisserie Holdings is now expected to announce full-year results next spring, with prior year earnings also expected to be restated.

This week, it appointed Rhys Iley, a former Starbucks executive, as group commercial director, reporting to Steve Francis, its new chief executive.

Nick Perrin was hired as interim chief financial officer earlier this month.

Patisserie Holdings’ plan to replace Grant Thornton with RSM comes during a tumultuous week for the UK’s accounting profession, with competition watchdogs recommending radical reforms such as the introduction of joint audits.

The FRC, which has been criticised for a ponderous approach to enforcement cases, said last week that it would investigate Grant Thornton’s audit of Patisserie Holdings’ accounts for the 2015, 2016 and 2017 financial years.

The Serious Fraud Office has also opened a criminal investigation into “an individual”, thought to be Mr Marsh.

Since the emergence of the accounting irregularities, questions have been raised about apparent double-payment of incentive awards to senior executives and the existence of previously undisclosed overdraft facilities.

In an extraordinary development, the company was also forced to announce that Her Majesty’s Revenue and Customs had served a winding-up petition against it – a threat which has now ended.

A spokesman for Patisserie Holdings declined to comment.


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